Nigeria is not only Africa’s biggest cryptocurrency market but is also a leading adopter of digital currencies globally. Official figures show the country is well ahead of fellow African countries. Citizens of the West African state use cryptocurrencies for cross border payments as well as for international remittances among many growing use cases. However, this growth momentum faces a threat from an old vice — scams.
Cryptocurrency-related scams threaten to overrun the blockchain space as new ones get launched all the time. Adding to the woes is the global pandemic, covid-19, which appears to have opened a new artery for criminals. Many concerned stakeholders are now raising the alarm as they try to turn the tide against criminals. The Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), the equivalent of Nigeria’s blockchain association, is one organization sounding the alarm.
Scams: A Threat to Crypto Adoption
SIBAN is mandated with promoting cryptocurrency adoption as well as ensuring consumer protection against crypto scams. The organization believes the scourge, if left unchecked, will not only impede further growth of the space but may well reverse public confidence in the emerging technology. Senator Iyere Ihenyen, General Secretary (GS) of SIBAN, speaks to news.Bitcoin.com. He starts by explaining why Africa’s most populous nation has been grappling with scams for years.
“So to really understand the rising rate of scams in Nigeria, it is vital to understand the context. A country of over 200 million people with a high rate of youth unemployment and underemployment, Nigeria has unfortunately made itself a haven for scammers,” explains Ihenyen. The Nigeria market presents scammers with a large pool of desperate people to target. Still, some fall victim to scams not because they are desperate but because of “sheer greed.”
As Ihenyen observes, scammers are now “riding on the rising popularity of the blockchain and cryptocurrencies to dupe even more members of the public.” The GS is asked about Inksnation, an investment platform that has been labeled a scam by some Nigerians. Ihenyen, who says he first heard of this alleged scam in December 2019, dismisses claims by its founders that the investment scheme has its own blockchain. According to Ihenyen, Inksnation typifies scams that routinely take advantage of Nigeria’s economic situation to defraud thousands of unsuspecting investors.
Still, Ihenyen says contrary to a perception that nothing is being done, efforts are ongoing to rid the space of scams. For instance, he says SIBAN and Nigeria’s Securities and Exchange Commission (SEC) have both issued public alerts warning the public about Inksnation. Predictably, the alerts have not stopped Inksnation from continuing to invite more Nigerians to invest with it. Ihenyen points to two possible reasons why Inksnation is seemingly unfazed by the alerts and why Nigerians appear indifferent to the alerts.
Ihenyen suggests that Inksnation is aware that SIBAN can only issue advisories but lacks the power to enforce or to make arrests. On the other hand, the SEC may be in a position to cause an action to be taken against Inksnation. However, by deliberately labeling itself as a blockchain entity, an unregulated space, it thinks the regulator lacks sufficient legal grounds to take action.
In addition, Ihenyen highlights the difficulty of convincing a greedy investor who has made up his mind to walk away. When SIBAN issued an alert against Inksnation, it received brickbats instead of plaudits, the GS says. In the meantime, Ihenyen suggests the same socio-economic and legal environment to be responsible for enabling two more prominent investment scams to proliferate. Ethereum Million Money and Forsage are two other investment platforms which began “trending from the month of March till date.”
According to some Nigerian media reports, Ethereum Million Money is a multi-level marketing scam that has some investors already counting losses. Similarly, a report by behindmlm.com — a scam tracking website — seemingly backs Ihenyen’s claim about Forsage. Forsage has also been flagged by regulators in the Philipines. At the time of writing, SIBAN had just received fresh complaints about another possible scam, Lionshare.
SIBAN’s Long-Term Plan to Counter Scams
Turning his attention to what SIBAN is planning to do to curb incidences of cryptocurrency scams, Ihenyen says they are looking to collaborate with like-minded institutions in raising awareness. “SIBAN plans to partner with Blockchain Nigeria User Group (BNUG), the Cryptography Development Initiative of Nigeria (CDIN) and other bodies in the space to launch the Anti-Scam Alert Project (ASAP).” Finally, Ihenyen says SIBAN has a “special blockchain education project loading, in collaboration with select local and global blockchain & crypto platforms.”